Today is a big day. We‚Äôre thrilled to announce the next evolution of our Tucows Email Service.

Building on our experience providing millions and millions of mailboxes to service providers around the globe, we‚Äôve made a number of innovations in this latest version that have resulted in a truly outstanding hosted email service.

The first is our back-end technology that has been designed to provide rock-solid reliability, the ability to grow to meet demand from our customers and their end-users, and for easy integrations. You can read about ‚Äúwhat‚Äôs under the hood‚Äù of our email service in an earlier post by Joey.

And of course, we‚Äôve built our service from the ground up to meet the needs of service providers. It includes a web-based branding tool so a service provider can take our completely white-labeled service and make it his own. It also has additional tools for our Tier II Support team, meaning speedier resolutions, often at first call.

Our most significant development is in our new web mail interface (POP and IMAP are available too.) By working with Nitido, we have developed a web mail interface that competes with the leading free web mail providers.

You can read more about the new Tucows Email Service over on our site.

If you‚Äôre an existing customer, please log into the RRC or RWI to gain access to our Test environment where you can evaluate the service. If you‚Äôre a new customer please contact our Sales team.

We believe service providers have a unique opportunity to offer our web mail to their customers. When matched with Tier I customer support it becomes a retention tool, not just an after-thought when bundling services.

We all know email is a highly-‚Äústicky‚Äù service. Thinking about my own email usage, I have an ISP that I have used since university for my personal email (yes of course, they are a Tucows reseller ‚ò∫), I also have a handful of free web mail accounts that I use for personal email, subscriptions, and while traveling and away from my home and work computers.

Until the advent of next-generation AJAX-based web mail I always pop‚Äôd my email through Outlook or another local mail client. For me, regular use of web mail wasn‚Äôt an option. It was too clunky and slow and didn‚Äôt give me the features I needed to manage my personal information.

Of course that‚Äôs all changed. And I think Service Providers have an opportunity to use competitive web mail as a value-added service.

It seems like a no brainer to me. Service Providers are running email anyway, and by offering a competitive web mail experience, you can reduce your support costs by not having to explain POP or IMAP setups for every individual. You can just set them up, point them to the web and be there to support them if they have any issues.

The numbers show web mail use is on the rise. According to Charlene Li of Forrester, the number of users who use web mail once a week is up 4% from 27% to 31% in just one year. That‚Äôs a big jump, and I think we can attribute that to the increased use of the free web mail services.

As web hosting companies and ISPs look to retain customers, offering competitive value-added services like our web mail is a an opportunity to leverage leading-edge technology without making the upfront investment in development and ongoing investment in running an email system.

Email service tailored specifically to the needs of web hosting companies and ISPs

TORONTO, May 23 /CNW/ – Tucows Inc. (AMEX:TCX, TSX:TC), a leading provider of Internet services to web hosting companies and ISPs worldwide, has unveiled the next generation of its Tucows Email Service.Continue reading →

Quarter Highlighted by Solid Financial Performance, Including Record Revenue, Record Adjusted Net Income and Continued Strong Cash Flow Generation

TORONTO, May 10 /CNW/ – Tucows Inc. (AMEX:TCX, TSX:TC), a leading provider of Internet services to web hosting companies, ISPs and other service providers worldwide, today reported its financial results for the first
quarter of fiscal 2007, ended March 31, 2007.

Highlights for the first quarter included:

A 16% year-over-year increase in net revenue to a record $17.8 million

A 62% year-over-year increase in adjusted net income to a record $2.4 million

Net income of $0.7 million

Cash flow from operating activities of $1.2 million

A 17% year-over-year increase in deferred revenue to a record $48.0 million.

“The first quarter of 2007 was highlighted by another solid financial performance,” said Elliot Noss, President and Chief Executive Officer, Tucows Inc. “We continue to grow our business by using our wholesale channel to deliver Internet services like domain names and email that are critical to our service provider customers. As our business scales, the leverage in our business becomes more and more apparent. We expect to see continued growth as we move forward.”

“The first quarter puts us on track to meet our announced target of $10-12 million in cash flow from operations for 2007,” said Noss. “We continue to expect domain registration revenue to grow in the low double digits and remaining revenue to grow at higher rates. We expect that operating expenses will only increase at about half the rate of gross profit.”

Summary Financial Results
(Numbers in Thousands of US Dollars, Except Per Share Data)

Three Months Ended
March 31, 2007

Three Months Ended
March 31, 2006

Net Revenue

17,771

15,287

EBITDA

1,971

434

Adjusted Net Income

2,442

1,506

Net Income

750

(157)

Net Income/Share

0.01

0.00

Cash Flow from Operations

1,165

1,834

Cash, short-term investments and restricted cash at the end of the first quarter of fiscal 2007 was $6.6 million compared to $7.3 million at the end of the fourth quarter of fiscal 2006 and $11.8 million at the end of the first quarter of fiscal 2006. The decrease compared to the end of the fourth quarter of fiscal 2006 is primarily the result of the use of $1.3 million for the repurchase of the Company‚Äôs shares under its previously announced stock buyback program and the use of $1.2 million to purchase hardware to support the hosted email services business, which were partially offset by the generation of cash flow from operations of $1.2 million during the first quarter of fiscal 2007.

Net revenue for the first quarter of fiscal 2007 increased 16% to $17.8 million from $15.3 million for the first quarter of fiscal 2006. The increase was the result of growth across all areas of the business.

Revenue

Cost of Revenue (excluding Network costs)

Three Months Ended
March 31, 2007

Three Months Ended
March 31, 2006

Three Months Ended March 31, 2007

Three Months Ended March 31, 2006

Domain Names, Excluding Domain Direct

11,901

10,667

8,782

7,675

Other Internet Services, Including Domain Direct

4,400

3,776

1,015

932

Sale of Domain Names

82

-

-

-

Advertising and Other Revenue

1,388

844

52

-

Total

17,771

15,287

9,849

8,607

Adjusted net income for the first quarter of fiscal 2007 increased to $2.4 million from $1.5 million for the corresponding quarter of last year. Net income for the first quarter of fiscal 2007 was $0.7 million, or $0.01 per share, compared with a net loss of $0.2 million, or $0.00 per share, for the first quarter of fiscal 2006. Included in net income and adjusted net income for the first quarter of fiscal 2007 is a gain on foreign exchange of $51,000 compared with a loss on foreign exchange of $88,000 for the corresponding quarter of fiscal 2006.

Deferred revenue at the end the first quarter of fiscal 2007 was $48.0 million, an increase of 17% from $41.1 million at the end of the first quarter of fiscal 2006 and an increase of 6% from $45.1 million at the end of the fourth quarter of fiscal 2006.

This release may contain forward-looking statements, relating to the Company‚Äôs operations or to the environment in which it operates, which are based on Tucows Inc.‚Äôs operations, estimates, forecasts and projections. These statements are not guarantees of future performance and are subject to important risks, uncertainties and assumptions concerning future conditions that may ultimately prove to be inaccurate or differ materially from actual future events or results. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. Consequently, investors should not place undue reliance on these forward-looking statements, which are based on Tucows Inc.‚Äôs current expectations, estimates, projections, beliefs and assumptions. These forward-looking statements speak only as of the date of this presentation and are based upon the information available to Tucows Inc. at this time. Tucows Inc. disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Conference Call

Tucows will host a conference call today, Thursday, May 10, 2007, at 5:00 p.m. (ET) to discuss the Company’s first quarter fiscal 2007 results. To access the conference call via the Internet go to http://tucowsinc.com, and click on “Investor Relations.”

For those unable to join the conference call at the scheduled time, it will be archived for replay both by telephone and via the Internet beginning approximately one hour following completion of the call. To access the archived conference call by telephone, dial 1-877-289-8525 or 416-640-1917 and enter the pass code 21228036 followed by the pound key. The telephone replay will be available until Thursday, May 17, 2007, at midnight. To access the archived conference call via the Internet, go to http://tucowsinc.com and click on “Investor Relations.‚Äù

About Tucows

Tucows Inc. (AMEX:TCX, TSX:TC) provides Internet services and download libraries through a global distribution network of over 7,000 service providers. This distribution network primarily consists of web hosting companies, ISPs (Internet Service Providers) and other Internet related service companies. These companies use Tucows‚Äô provisioned services to offer solutions to their customers: enterprises, small and medium businesses and consumers. Tucows is an accredited registrar with ICANN (the Internet Corporation for Assigned Names and Numbers) and earns most of its revenue from domain name registration services plus hosted email, spam and virus protection, Blogware, website building tools, the Platypus Billing System and digital certificates. For more information, please visit: www.tucowsinc.com

Change in prepaid fees for domain name registry and other Internet services fees

(1,980,653)

(2,313,048)

Change in deferred revenue

2,896,925

3,044,520

Dividend income

(88,431)

-

Transitional costs

-

814,263

Other income

-

(473,606)

Reversal of contingencies

(357,500)

-

Subtotal Adjustments to EBITDA

470,341

1,072,129

Adjusted Net Income

$

2,441,708

$

1,506,076

(1) Adjustments to EBITDA

We define Adjusted EBITDA as net income adjusted for depreciation, amortization, interest, taxes and further adjusted for certain cash and non-cash charges. For the three months ended March 31, 2006, we incurred $814,263 of transitional costs in connection with our acquisition of the Hosted Messaging assets of Critical Path. In addition, during the three months ended March 31, 2006, we received $473,606 in connection with settlements related to patents we acquired in the merger with Infonautics in 2001. The net amount of cash we collected for domain registrations and other Internet services paid for the full term at the time of activation and deferred, amounted to $916,272 for the three months ended March 31, 2007 compared to $2,896,925 for the three months ended March 31, 2006.

Tucows Inc.
Consolidated Statements of Cash Flows

(Dollar amounts in U.S. dollars)
(unaudited)

Three months ended
March 31,

2007

2006

Cash provided by (used in):

Operating activities:

Net income(loss) for the period

$

749,695

$

(156,964)

Items not involving cash:

Depreciation of property and equipment

871,190

561,969

Amortization of intangible assets

296,833

131,833

Unrealized change in the fair value of forward exchange contracts

(216,789)

182,944

Stock-based compensation

62,700

70,200

Change in non-cash operating working capital:

Interest receivable

-

37,594

Accounts receivable

(852,623)

(1,827,642)

Prepaid expenses and deposits

(727,236)

3,413

Prepaid fees for domain name registry and other Internet services fees